Freedom Foundation

Arguing About the Minimum Wage With Liberals is Like an Adult Reasoning With a Child

Tuesday’s public hearing on the minimum wage in the Washington State House’s Labor Committee typified pretty much every argument between conservatives and liberals.

And, for that matter, adults and children.

On the one side of the issue, you had people using numbers, logic and reason to explain why something doesn’t work. To which the other side responded, “I don’t care. Give it to me anyway. And by the way, send the bill to someone else.”

Speaking in support of a Democrat-sponsored measure, HB-1335, that would raise the state’s minimum wage from $9.47 to $12 over four years, were people like Laura Wait, who owns an auto repair business in Renton.

“Do businesses realize employees are on their team?” she asked. “They work and sweat just for a chance to purchase the things their family needs.”

If all workers were paid at least $12 an hour, Wait reasoned, more would be able to afford expensive auto repairs in shops like hers. 

“As it is now,” she said, “I have to keep a box of tissues by my desk because someone invariably breaks down crying.”

Meanwhile, on the logic and reason side of the equation was Bob Mandel, who owns a Dairy Queen restaurant in University Place and characterized assurances from HB-1335 supporters like Wait that it would have minimal impact on his business as “presumptuous.”

Mandel’s store, which he described as “slightly below average” by company standards, did $935,000 in net sales last year, but faces $750,000 in remodeling costs to maintain the building. 

Overall, he said, the restaurant operates on a 4.3 percent profit margin and was required to take a line of credit loan for three-quarters of that amount to get through the slow winter months.

Mandel said his workers were paid for 24,000 labor hours last year at $10 an hour, but he’d need to come up with an additional $75,000 in sales to raise their pay to $12, and he isn’t certain he could pass that amount on to his customers in the form of a price increase.

Mandel, who’s paid himself  a whopping $40,000 a year for each of the previous three years, conceded there are restaurants—and other businesses—making enough money to absorb such an increase. 

But not all do, and those that don’t will either have to lay off personnel, hire fewer new employees than they might otherwise have or run themselves into bankruptcy trying to keep up. If that’s the case, how could the net impact on employment be anything other than negative?

“How many people would have to lose their jobs and require public assistance?” Mandel asked the committee members. “How many businesses would have to fail? What amount of collateral damage is acceptable to you?”

Meanwhile, Don Orange, who passes himself as just an ordinary businessman but seems to spend at least as much time in Olympia testifying on behalf of leftist causes as he does tending to his Vancouver car repair business, scoffed at Mandel’s dilemma.

“I just wonder how big a check he has to write to Warren Buffet (the billionaire entrepreneur who owns Dairy Queen) every month,” Orange asked.

The short answer is that it’s none of Orange’s business. But the longer answer is … whatever Mandel agreed to pay as part of his franchise agreement with Buffet. 

No one put a gun to Mandel’s head and made him sign the agreement—any more than he put a gun to the head of his employees and forced them to work for $10 an hour.

In each case, the franchisee or employee is participating in a voluntary transaction because they believed when the agreement was made they were getting a fair bargain.

They’d obviously like to do even better—especially if it only means billionaires like Warren Buffet wind up making a little less. But how many Bob Mandels have to go out of business before Dairy Queen goes the way of Ponderosa, Bennigans, Tony Roma’s and other apparently successful restaurant chains that ultimately failed and left their employees jobless?

It’s not a question grandstanding politicians anxious to buy votes with someone else’s money need to consider. But it’s one that voters on the lowest end of the earning scale—the ones being promised a 33 percent raise for nothing, but only if they keep their jobs—should be very worried about.